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What to Look for When Shopping for Debt Relief Companies

If your debt problem is serious enough that you are considering help from a debt relief company, you might be scared, and you probably feel like you’re at the end of your rope. I did when it happened to me. You’re pretty vulnerable and maybe even feeling desperate at times. There are debt relief companies that know that and have taken advantage of thousands of consumers in this situation. These companies have certainly put a dark cloud over the industry, and people are suspicious. And rightfully so!

Before you try to get help through a debt relief company, realize there are things you can do on your own that they will charge you for. You can send a 100-word statement to the credit agencies, explaining your delinquencies, disputing any inaccurate information, and pay your bills on time. You can also ask your credit card companies if they will work out a payment plan that’s more affordable or agree to settle the debt at a lower amount. (Realize this last option will have a negative effect on your credit.)

If you’ve tried to manage your debt on your own but still feel you need help from a debt relief company, do your homework. When you’re researching, you’ll see there are different types of debt relief companies out there, including consumer debt relief companies to help manage credit card debt, student loan debt relief companies for student loan debt, and tax debt relief companies that can help with tax debt .

Start by checking with your state’s Attorney General office to find out if the debt relief companies in your state have to be licensed. Also check with your local consumer protection agency or Better Business Bureau to see if there are any complaints against the companies you’re interested in doing business with. Then take it further. Read other consumer reviews on the company. Ask each company what services they provide, what their fees are and how long it will take to get results. Research until the cows come home, and then some.

All of the following are red flags. If the company you are working with is engaging in any of the following, run. Run like the wind.

  • They suggest that you get a new social security number
  • They want you to pay a fee upfront, before they do anything to help
  • They ask you not to contact your creditors
  • They make lofty promises and guarantees

Finally, be sure you read and understand the fine print before you sign anything. Remember, if it sounds too good to be true, it probably is.